Does evertex fabrinology's (TPE:1470) Statutory Profit Adequately Reflect Its Underlying Profit?

It might be old fashioned, but we really like to invest in companies that make a profit, each and every year. That said, the current statutory profit is not always a good guide to a company's underlying profitability. Today we'll focus on whether this year's statutory profits are a good guide to understanding evertex fabrinology (TPE:1470).

It's good to see that over the last twelve months evertex fabrinology made a profit of NT$31.7m on revenue of NT$647.1m. Below, you can see that both its revenue and its profit have fallen over the last three years.

Check out our latest analysis for evertex fabrinology

Of course, when it comes to statutory profit, the devil is often in the detail, and we can get a better sense for a company by diving deeper into the financial statements. This article will focus on the impact unusual items have had on evertex fabrinology's statutory earnings. Note: we always recommend investors check balance sheet strength. Click here to be taken to our balance sheet analysis of evertex fabrinology.

The Impact Of Unusual Items On Profit

Importantly, our data indicates that evertex fabrinology's profit received a boost of NT$3.5m in unusual items, over the last year. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. We ran the numbers on most publicly listed companies worldwide, and it's very common for unusual items to be once-off in nature. And, after all, that's exactly what the accounting terminology implies. If evertex fabrinology doesn't see that contribution repeat, then all else being equal we'd expect its profit to drop over the current year.

Our Take On evertex fabrinology's Profit Performance

Arguably, evertex fabrinology's statutory earnings have been distorted by unusual items boosting profit. Because of this, we think that it may be that evertex fabrinology's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you'd like to know more about evertex fabrinology as a business, it's important to be aware of any risks it's facing. For example, we've discovered 3 warning signs that you should run your eye over to get a better picture of evertex fabrinology.

This note has only looked at a single factor that sheds light on the nature of evertex fabrinology's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying to be useful.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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